Aussie election budget shows extended deficits; US sentiment drops sharply; Moody's warns the US; Canada mulls export taxes; Rupiah hits record low; UST 10yr at 4.30%, gold up and oil dips; NZ$1 = 57.4 USc; TWI = 66.8

Here's our summary of key economic events overnight that affect New Zealand with news the own goals keep coming for the US.

But first, the overnight dairy Pulse auction came in with the opposite results signaled by the derivatives market. The SMP price was expected to bounce back after the weakish full auction event the week before, but basically it didn't. And the WMP price was expected to fall sharply. It did fall, but it was minor in the end. So these Pulse signals ended up changing little.

Last night's 2025/26 Australian Budget didn't deliver any real surprises in the end, although it is clearly an election budget. But it is one where the dominant challenge has shifted from battling inflation's effects to preparing for global trade instability, and great power rivalry. Australia is facing being abandoned by the US while it also faces rising security challenges from China.

Although they are facing budget deficits that could be -1.5% of GDP next year, and probably ongoing deficits for the next ten years, they are accepting that as they announced new spending of about AU$35 bln with much of it focused on cost of living support, some modest tax cuts, and defense. There is a rise in off-budget spending as well. So the funding program there will be growing fast.

In the US, last week's Redbook retail survey showed sales held up to be +5.6% higher than year-ago levels. However with inflation rising, and quite quickly now, this isn't as impressive as it was in 2024 when inflation was basically under control.

Those fears of returning inflation (from tariffs) are behind a tumble in American consumer sentiment, reversing to lows not seen since the last Trump presidency. The Conference Board survey's expectations index was particularly hard hit, and now sits at a level they say indicates recession ahead. This survey back up the earlier University of Michigan one.

And ratings agency Moody's is warning that even in the best scenario, the US's situation is likely to get worse under the current policy direction.

But not all sectors are drooping. New dwelling sales are holding at average levels, up +1.8% in February from a month ago, and up +5.1% from year-ago levels. But inflation might be behind this recent small demand rise - buyers getting in before inflation hits existing stock, and before interest rates rise again.

But the next regional Fed district to report is saying things in their Mid-Atlantic region are slowing. The Richmond Fed's factory survey has yawed from a small expansion to a moderate contraction in their March survey. Observers had expected the measure to rise to a faster expansion, so the variance is notable. New order levels fell, prices paid for inputs rose faster than expected. The clearest example is the new record-high rise for copper.

An interesting phenomenon is developing in US equity markets. Retail investors are turning bullish, driven partly by their political bias. At the same time, professional investors are taking advantage of them and are net sellers.

Their northern neighbour is talking about retaliatory export taxes as a way to get Trump to talk to them seriously. Their combination with American tariffs isn't going to help anyone.

In Indonesia, their currency crisis is deepening, with the rupiah now at its lowest since the GFC.

In China, their central bank has adjusted how it raises funds via its Medium Term Lending process. This may be an important change.

The UST 10yr yield is now at 4.30%, down -2 bps from yesterday at this time. The key 2-10 yield curve is holding at +29 bps. Their 1-5 curve inversion is -3 bp. And their 3 mth-10yr curve is flat. The Australian 10 year bond yield starts today at 4.49% and down -1 bps from yesterday. The China 10 year bond rate is now at 1.89% and down -2 bps. The NZ Government 10 year bond rate is now at 4.62%, and again unchanged from yesterday.

Wall Street has started its Tuesday session and losing its earlier gains on the S&P500. Overnight, European markets were all up about +1.1% except London which only rose +0.3%. Yesterday, Tokyo ended its Tuesday trade up +0.5%. Hong Kong was down a sharp -2.3%. Shanghai was little-changed. Singapore was up +0.5%. The ASX200 ended its Tuesday trade up another pre-budget +0.1%. And the NZX50 gain +0.5% on the day.

The price of gold will start today at just on US$3026/oz and up a net +US$17 from yesterday.

Oil prices are down -50 USc from yesterday at just over US$68.50/bbl in the US and the international Brent price is still just over US$72.50/bbl.

The Kiwi dollar is now at 57.4 USc and up +20 bps from this time yesterday. Against the Aussie we are down -10 bps at 91 AUc. Against the euro we are up +10 bps at just under 53.1 euro cents. That all means our TWI-5 starts today just under 66.8, and little-changed.

The bitcoin price starts today at US$87,803 and down -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.2%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».